Justice Department announces charges in $500 million senior fraud schemes

  • Criminal charges are filed against more than 250 alleged perpetrators in mailing, telemarketing schemes.
  • Losses stemming from these plots are estimated at more than $500 million.

The Justice Department announced a broad enforcement sweep targeting financial fraud against the elderly, resulting in charges filed against more than 250 defendants.

"Today's actions send a clear message: We will hold perpetrators of elder fraud schemes accountable wherever they are," Attorney General Jeff Sessions said in announcing the charges Thursday.

The DOJ coordinated with other law enforcement agencies, including the FBI, the Federal Trade Commission and state attorneys general, in building the cases.

The perpetrators allegedly used mass mailing and telemarketing to rip off seniors, as well as identity theft and financial abuse by guardians.

In 2015, individuals made 1,108 calls to the Senate Aging Committee's toll-free fraud hotline. That number more than doubled to 2,282 in 2016.

"By bringing cases against these scammers, we send a strong message to other con artists that we will not stand by and allow older Americans to be victimized," said Sen. Bob Casey, D-Pa., a ranking member of the Senate Aging Committee.

Phony winners

More than a million people, most of whom were elderly, were victimized, according to the Justice Department.

In one case, the FTC and the state of Missouri filed charges against two men and their sweepstakes organization.

The FTC alleged that seniors would receive mailers claiming that they had just won more than $1 million or that they could win a large cash prize if they answered a question and submited a registration fee.

Since 2013, victims lost more than $110 million to this scheme, the FTC said.

In another case, the FTC and the state of Missouri pursued defendants who allegedly coordinated with telemarketers to hoodwink the elderly into buying phony tech support services.

Some victims of this scheme lost more than $50,000 paying for fake security software. One person paid nearly $400,000 over several years, according to the FTC.

Spotting a ripoff

People who are targets of a sweepstakes scheme get a call, card or an email telling them that they've won a prize, but they'll need to pay a fee or "taxes" in order to pick up their winnings.

A legitimate sweepstakes would never ask you to wire money or force you to pay a fee in order to claim your prize. Real offers will also tell you the terms and conditions, including the rules of the contest, according to the FTC.

See below for details from the FTC on how to spot and avoid a tech support scam.

Targeting retirees

Older Americans are losing about $36.5 billion each year to elder financial abuse, according to 2015 data from True Link Financial.

Meanwhile, 3 in 10 state securities regulators report seeing an increase in senior financial fraud, according to data from the North American Securities Administrators Association.

See below for examples of fraud schemes targeting the elderly.

Elder financial fraud cases

Issue
Percentage of cases reported
Third-party abuse/exploitation 27%
Account distributions 26%
Family member, trustee or power of attorney taking advantage 23%
Diminished capacity 12%
Combined diminished capacity and third-party abuse 12%
Fraud 6.30%
Elder exploitation 5.70%
Friend, housekeeper or caretaker taking advantage <1%
Excessive withdrawals <1%
SOURCE: North American Securities Administrators Association